Watchfinder and Yoox Net-A-Porter add almost €1 billion in six months to Richemont sales

Global sales for Richemont rose by 21% to €6.8 billion for the six months ended September 30.

Yoox Net-A-Porter and Watchfinder, which have been included as wholly owned for the first time by the luxury conglomerate for the reporting period, contributed €959 million to coffers.

Without the contribution from the new division that Richemont calls Online Distributors, sales would still have risen by 8% at constant exchange rates (6% actual).

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Online retail accounted for 14% of Group sales.

“During the past six months, Richemont strengthened its portfolio with two strategic investments aimed at offering our discerning and globally dispersed clientele more options in how, when and where they engage with and purchase from our Maisons. We now fully own YOOX NET-A-PORTER, the leading online luxury retailer, and Watchfinder, a leading omni-channel platform for premium pre-owned timepieces. As part of the continual assessment of our portfolio, we divested Lancel. These strategic changes have had a material impact on our operating profit and net cash position in the period under review,” Richemont chairman Johann Rupert says in commentary accompanying the results.

Richemont chairman Johann Rupert.

Mr Rupert also stresses that Net-A-Porter and Mr Porter, the female- and male-focused fashion ecommerce sites will continue to sell jewellery and watches from non-Richemont suppliers.

As well as completing the acquisition of YNAP, and swooping for Watchfinder, Richemont has also forged a strategic partnership with Alibaba Group this year, which aims to benefit from the platform’s leadership in online luxury shopping for Chinese customers.

Excluding Online Distributors, sales growth was primarily driven by strong performance of the Jewellery Maisons and double digit increases in the Maisons’ directly operated boutiques and online stores. Retail sales in jewellery and watches more than offset a 2% decline in wholesale sales, which was mainly due to the Specialist Watchmakers’ ongoing prudent inventory management — correcting previous oversupply to retail partners — and upgrade of the wholesale distribution network.

European sales rose by 28% for the six month period, although inclusion of YNAP and Watchfinder, which are strongest in the UK, boosted the result. Europe represents 30% of global turnover.

Excluding Online Distributors, sales in the region increased by just 1% over the prior year period, reflecting mixed performances in terms of markets, product lines and channels as well as the disposal of Lancel.

Sales in the United Kingdom contracted following a double digit increase in the prior year period while sales in France and Switzerland increased.

The Americas posted a 42% increase in sales, benefiting from the inclusion of YNAP which has a strong customer base in the region. Excluding Online Distributors, sales grew by 13%, driven by higher sales in all product categories and distribution channels. The growth was led by jewellery, clothing and the retail channel. Americas contribute 18% to global sales, up from 16% in the same six months in 2017.

The Specialist Watchmakers’ sales were 2% higher than in the prior year period. Double digit growth in directly operated boutiques offset lower wholesale sales, which were impacted by ongoing control of sell-in and distribution optimisation initiatives, Richemont says.

Performance was varied across Maisons and regions, with good momentum at Vacheron Constantin, Roger Dubuis and Jaeger-LeCoultre and, regionally, in Asia Pacific.

Group profit for the period rose 131% to €2.25 billion, but was flattered by a post-tax non-cash gain of €1.38 billion on the revaluation of existing YNAP shares.

Net cash amounted to € 1.58 billion at 30 September 2018 after a € 3.75 billion cash outflow related to the YNAP and Watchfinder acquisitions and dividend payment. The price paid for Watchfinder was not disclosed.

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